With streaming income development slowing to six.2% in 2024, the recorded music business’s consideration is firmly fastened on superfans because the ‘get out of jail free’ card. The rising sophistication of artist merch has reached the stage the place followers should buy Taylor Swift vogue luggage and store her jewellery vary, in the meantime all eyes are on the approaching Spotify supremium tier (as reported by Bloomberg). But there are early warning indicators that the business could also be going too quick and that superfan spending is being pushed to the restrict.
Record labels’ expanded rights income (the share of merch, branding, sponsorship, and many others. that labels take part in) was up a powerful 16.4% in 2024 and was greater than a tenth of all recorded music revenues in 2024. At the identical time, nonetheless, bodily revenues have been down -4.8%, and have oscillated between development and decline yearly of the last decade thus far. Most considerably although, all was not nicely within the dwell music sector in 2024. This issues as a result of so a lot of these dwell followers are the exact same folks shopping for merch (greater than half of merch patrons additionally go to concert events each week). In quick, each the dwell and recorded music companies are attempting to max out the spending of the identical prospects, all on the similar time that streaming costs have gone up and excessive rates of interest imply rents and mortgages are getting ever larger.
Live music has undergone a income renaissance since Covid, with revenues of main dwell music firms greater than double their pre-Covid excessive. Revenue development soared in 2022 and 2023, however slowed to simply 4.6% in 2024. Most importantly although, whereas income was up, the variety of tickets offered was down. According to Pollstar, although 2024 income for the highest 100 excursions globally was up 3.6% ticket gross sales have been down -5.7%. For the highest 100 US excursions tickets have been down -9.2%, and income was down too. In Ibiza, it was the same story with ticketing income up 6.4% however tickets offered down -12.0%.
Live music firms argue that dwell music is value inelastic – that means demand will stay steady regardless of value will increase and customers will tolerate larger costs as a result of they need the product a lot. That was true within the post-Covid period, when followers have been so determined to see concert events once more that they have been keen to pay a premium to take action. But the factor about elastic is, that when you stretch it sufficient, it snaps. Again, in accordance with Pollstar, the common ticket costs for the highest 100 excursions worldwide rose 53.9% between 2021 and 2024. The elastic snapped in 2024.
Fans are nonetheless followers however they’re being pummeled for spending from three instructions: larger costs (plus supremium to return!) from DSPs; merch and vinyl from labels and artists; larger ticket costs from dwell firms. This is all whereas they’re discovering it more durable than ever to pay the lease or mortgage, and this isn’t even contemplating the inflation that tariffs will almost definitely deliver. Instead of pondering of the fan as a single particular person, three completely different components of the music business are seeing the fan as three separate addressable viewers segments. We at the moment are seeing the influence of that – and it’ll worsen. So a lot in order that we could even see a decline in dwell music revenues in 2025. Keep a watch on Live Nation’s Q1 25 outcomes later at this time (May 1st) for what could also be an early indicator of what’s to return.
As now we have lengthy mentioned at MIDiA, you can not harvest fandom if you’re not additionally nurturing it. As lengthy because the fan seems as three disconnected advertising and marketing lists for the music business, what occurs as an alternative is that the sphere will get harvested thrice over. It is time for a joined up view of the fan and a greater understanding of simply how a lot cash they will spend. Otherwise superfans will merely by no means be given the prospect to change into tremendous sufficient.